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6 Challenges Guiding Distributors of Foodservice & JanSan Supplies to Software Adoption

Wed, Mar 22, 2017

Distributors of Foodservice and JanSan supplies are growing in terms of the diversity of the products that they distribute but are not necessarily adopting any new forms of managing these new products and the activities associated with selling them.

There are six challenges driving the adoption of software among distributors of Foodservice and JanSan supplies:

Challenge 1:  Tracking and claiming periodic vendor rebates

The generation of vendor rebate claims is typically a manual process, outside the operating system. The process usually involves spreadsheets populated through ad hoc system queries.  The manual claim processes put distributors at risk if they fail to file claims on time, are not able to reconcile the vendor claim remittances to their claims, or don’t file claims at all. With the process being outside the system, rebate receivables are not under ledger control and may age or even go uncollected. With vendor rebates sitting outside of the system, it also means rebate revenues are not connected to their associated transactions and are not available for profitability analysis.

Challenge 2:  Price management with rapidly changing purchase prices

With the frequency at which suppliers change their purchase prices and the number of individual suppliers which distributor represent, distributors are presented with a constant flow of purchase price changes. Distributors must have systems in place that allow them to efficiently manage the flow purchase price changes and to manage customer pricing.  The system need to allow for customer price management across various pricing vehicles including managed cost scenarios.  The ability to effectively manage purchase prices and manage customer pricing is critical to profitability.

Challenge 3:  Retaining margin control

With so many pricing points and the need to respond to price challenges rapidly, typically pricing that is not corporate-driven is distributed out to the field sales team.  With pricing distributed to the field, it's important to profitability that the pricing be appropriate to the market place or you will be putting margins at risk. Distributors need to have acces to the costs and its components, the underlying price and visibility of how the pricing compares with the last price and the last different price. However, most distributors are unable to view the price analytic information with just one screen, instead they are having to access multiple screens in order to capture the information and can’t leverage contemporary filtering and sorting functionalities. 

Challenge 4:  Accurately managing and calculating gross-profit based commissions

Commissions are a somewhat complicated process for distributors of Foodservice and JanSan supplies, with many distributors managing them differently and struggling to find a solution to cater for this flexibility. However most distributors are presented with commission systems that do not possess the flexibility to compute commissions across multiple of transaction permutations.  Specialists should be able to configure inclusions or exclusions of products, charges and services, by mode of delivery, order type and sales & profit thresholds. The system should also allow you to apply these rule sets across items, groups of items, customers, and groups of customers with varying rates of commissions.

Challenge 5:  One-off purchases or specials being costed at time of sale

Distributors have traditionally approached one-off customer purchases, commonly known as specials, as events to be costed at the time of the sale. Acquiring and maintaining these costs is labor intensive for most distributors. With the emergence of web store fronts and just-in-time suppliers, distributors are increasingly presented with the opportunity to expand their product portfolios and present special items. To take advantage of these opportunities, distributors need to have in place systems that allow them to efficiently manage the cost of specials.   

Challenge 6:  Deviated cost calculation and claims

Deviated costs are in themselves not a complicated issue, the problems arise when distributors are faced with deviation claiming. There are challenges for distributors to accrue deviated cost claims using the same cost their suppliers use while accounting for late deviation arrangements, addressing various supplier submission formats, handling rejections and re-submissions, and maintaining ledger control over the deviation receivables. While most operating systems can manage deviated costs, they don’t handle the claims, forcing distributors to export the information out of their system and sacrificing ledger control over the claims.